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PVD [MARKET PERFORM -8.9%] - Lower operating cost does not change company outlook - Update

We maintain a MARKET PERFORM rating but lower our target price by 17.4% due to risk of the Red Emperor on Tender-Assisted-Drilling rig (TAD) utilization rate and a weaker recovery in the day rate than previously expected. PVD should incur a loss of USD3.5 million in 2017 NPAT-MI due to low jack-up (JU) day rates and no TAD contribution, despite deep operating cost cutting and reversals in accounts receivable (AR) and the Science and Technology Development Fund (STDF) provision.